Abbott Laboratories

ABT Details

Abbott Laboratories (NYSE: ABT) is engaged in discovering, developing, and selling a diverse range of health care products. Its products are mainly sold globally to merchants, wholesalers, hospitals, healthcare institutions, labs, doctors' offices, and government organizations. The company has four operating segments viz, 1) Established Pharmaceutical Products, 2) Nutritional Products, 3) Diagnostic Products, 4) Medical Devices. ABT generated 64.12% of its H1FY21 revenue from outside the US.

Receipt of FDA Approval: On September 29, 2021, ABT announced the receipt of approval from the US Food and Drug Administration (FDA) for the Amplatzer Talisman PFO Occlusion System, used for treating patent foramen ovale (PFO) in patients at risk of recurrent ischemic stroke.  

Previously, on September 22, 2021, the FDA also approved the company's Epic Plus and Epic Plus Supra Stented Tissue Valves, used for treating patients with aortic or mitral valve disease. The FDA also authorized ABT's Portico with FlexNav transcatheter aortic valve replacement (TAVR) device to treat patients with aortic stenosis on September 20, 2021.

Expansion of Peripheral Vascular Offerings: ABT announced the acquisition of Walk Vascular, LLC, a commercial-stage medical device business with a minimally invasive mechanical aspiration thrombectomy system for the removal of peripheral blood clots on September 02, 2021. The acquisition, which complements ABT's vascular device portfolio, will also help increase its capacity to provide one-of-a-kind endovascular treatment solutions to improve patient care. The financing terms of the transaction were not disclosed.

Robust H1FY21 Results: The company reported a surge of 37.37% in net sales to USD 20.68 billion during H1FY21 (ended June 30, 2021) compared to USD 15.05 billion during H1FY20, with growth witnessed across all segments. As a result, its net earnings for H1FY21 increased to USD 2.98 billion from USD 1.10 billion reported in H1FY20. As of June 30, 2021, the company had cash and cash equivalents (including short-term investments) of USD 8.94 billion, with total debt amounting to USD 18.50 billion.

Key Risks: The firm works on a global scale and is subject to several region-specific regulatory restrictions. Obtaining any regulatory licenses required to market a medication or medical device is both expensive and time-consuming. Any delays or failures in product approvals might result in revenue loss for the business.

Outlook: In its Q2FY21 press release, ABT expects its FY21 diluted EPS (GAAP) from continuing operations to range between USD 2.75 – 2.95. It also expects adjusted diluted EPS from continuing operations to be USD 4.30 – 4.50 in FY21, excluding specified items.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ABT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: ABT's share price has increased 9.77% in the past nine months and is currently trading above the mid-point of the 52-weeks range of USD 103.13 to USD 129.70. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is at 35.46. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 134.96. Considering the slight uptick in the stock price, strong profit margins, market dominance, recent FDA approvals, and associated risks, we recommend a "Hold" rating on the stock at the current price of USD 120.20, up 0.62% as of September 30, 2021, 10:48 AM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.